Aurizon sets up Perth hub

Aurizon Holdings chief executive Lance Hockridge says the company has set up a project hub in Perth to work on its defining Pilbara iron ore rail and port project but warned of "a number of commercial hurdles" before it could push ahead with the billion-dollar investment.

Addressing shareholders at the Perth Convention and Exhibition Centre this morning to mark Aurizon's first annual meeting in WA, Mr Hockridge said the company had already invested $400 million in the State and built up a 1000-strong workforce.

He said Aurizon, which made its name as the government-owned Queensland Rail hauling coal on the east coast, said WA was becoming an increasingly important part of its business.

Aurizon already hauls iron ore for Gindalbie Metals' Karara project in the Mid West and runs bulk freight and intermidal goods including between WA and the east coast.

However, its defining push into WA has been Aurizon's participation earlier this year in Baosteel's $1.4 billion takeover of Aquila Resources. Aurizon is hopeful its participation in Aquila's West Pilbara project will give it the long hoped-for major slice of the WA iron ore transport sector.

"Clearly there is a lot of work to be done and we are focussed as a team to ensure this is done comprehensively and aligned to our business partners," Mr Hockridge said this morning.

He did not expand on the "commercial hurdles" of pushing ahead with the West Pilbara project, which also requires a greenfields port at Anketell, west of Rio Tinto's Cape Lambert, but thanked Premier Colin Barnett and State departments "for their assistance in progressing this proposal".

Since Aurizon and Baosteel launched their bid for Aquila in May, the iron ore price had tumbled to five-year lows because of a glut of new metal supply and weaker than expected Chinese demand.

The most pessimistic forecast for the iron ore price, which sits around $US76 a tonne, is for it to fall up to another $US20/t over the next 12 months.

If the pessimistic prognosis holds true, it would likely force Aurizon and Baosteel to defer their West Pilbara development plans, which come with a $6 billion to $8 billion price tag.